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Investment Services

April, 2018

THE MOST COMMON QUESTION NOWADAYS: WHAT IS MUTUAL FUND?

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“United we stand, divided we fall”

This proverb is applicable to mutual funds. But What Is Mutual Fund exactly? Mutual funds can be considered as a deposition in which investment has been made by a number of people together. The main objective of mutual funds is to increase the fund strength as well as the profit earned. A single individual may not have much money to support the financing, but if a bunch of people together do so, then it is possible.

Mutual funds are such an arrangement that permits people to do things as a group, which they could have never afford individually such as:

1. Pitch in their additional money for investing in assets, which is intended for a shared investment purpose.

2. Use the expertise of an experienced fund manager for managing their funds in various accounts, which is beyond normal individuals’ capabilities.
3. Profit from an industrial level investment, which is not possible for a single individual.

The mutual funds offered by Asset Management Company or AMCs. AMCs are a good option for beginners of mutual fund investment. As a neophyte will not have enough knowledge about the investments, the AMCs on his/her behalf puts his/her money into various assets that have promising return benefits. This is what the professional AMCs do.

AMCs recruit a number of people for managing the funds of different people in various assets. Every employee has his/her own role for the same. AMCs release numerous mutual funds schemes from time to time to suit the needs of their investors. Every scheme comes along with a portfolio statement, turnover account, and balance sheet.

Therefore, in conclusion, we can say that mutual funds are an investment opportunity that collects money from people, unite it to make the fund’s strength increase and then when it hits a reasonable amount, then invest it into bonds, stocks, and other money-making schemes of the market. The money is collected by the AMC and their fund manager invests this money in valuable investments. SEBI supervises these procedures to ensure complete transparency in the process, and that is why mutual funds are among the safest investment policies of the market at present. So with all being said, the question “What Is Mutual Fund?” gets answered.

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